For decades established record labels were the main force behind the most prominent artists in the industry. Now in the age of streaming and digital presence, label deals have evolved and become more flexible and tailored specifically to the artist.
Even though major label record deals are different now, there are still many cases of unfair contracts and controlling behavior from the label’s side, which can destroy an artist’s career.
Do the record labels still have full control over their artists? Let’s find out!
How Much Control Do They Have Over the Artist's Work?
It depends on the type of deal you have with your record label, how much leverage you have, and who owns the copyright to the works. Some labels may offer a deal for just one album or a single from an established artist, while others would want to invest in the unknown artist and fully launch their career.
The most common deals are:
- Conventional deals. In this deal, the record company claims the rights and ownership of the performing artist’s recordings for copyright duration. Investment is recouped based on music sales.
- 360-degree deals. In 360 deals the label gets to recoup its investment from all income streams that the artist generates, including touring and merchandising.
- Production deals. These deals are offered by a production company to record and produce your music.
- JV deals. If you produced records and want them to be promoted, you can then sign a joint venture (JV) label deal, where the label will do the marketing and promotion part. All revenues are then split 50/50.
- P&D deals. In a pressing and distribution deal, you’re releasing your record independently, while the independent label pays for the costs involved in manufacturing and assembling the album at the distributor's price. It’s usually lower than the label's price.
One of the most common deals for new upcoming artists is 360-degree deals. They’re suitable for relatively unknown artists, as the label helps to launch their careers by actively participating in all aspects of music production, promotion, and distribution. Here the label has more control over the artist and takes the percentage from the artist’s income other than record sales.
Also, in conventional deals, 100% of sound recording copyrights belong to the label, and the artist only receives a certain percentage of royalties from sales, streaming, and other uses of recording.
In contrast, there are P&D deals, where the label pays for the manufacturing costs to assemble the finished album, but artists have a right to retain 100% ownership of their sound recordings.
How Can an Artist Maintain More Control Over Their Music?
Even though the label provides great career support and development opportunities, financial considerations are a crucial aspect when it comes to an artist's decision to sign a record label deal. As a recording artist, you want to know how to protect your interests and retain control over your sound recordings.
If you want to keep ownership of their master recordings, you may want to offer a label a bigger percentage of revenue from the sale or use of the recording. Depending on where you are in your career and what your goal is, you may consider different types of deals.
Artists may very well just sign a contract with a label because they believe it would increase their income. A record label can do so directly by paying advances and royalties, or indirectly by creating additional revenue-generating opportunities, including touring and endorsement deals.
Before signing a record deal, you should hire a qualified lawyer to review the proposed contract and compile a counter-proposal to the offer. Never accept the first contract the label has offered you.
You need to protect your music and intellectual property, so make sure you’ve read the contract and fully understand all terms and conditions. Also, follow these tips to ensure you get the most out of your deal:
- Watch out for contracts with an initial term longer than a year. You can prevent a record label from excessively restricting your creative output by limiting the duration of your contract to one year. This one-year term is followed by a number of option periods, during which the record company can extend your contract.
- Don’t forget about the release commitment. You won't have any proof that the record label carried out the work necessary to create, package, and distribute your album for sale to the public without a release commitment from the label.
- Check whether the royalty rate is reasonable. A royalty rate of 5 to 10% is usual for new artists. For emerging artists, it’s 10-14%, while established artists may earn up to 18%.
- Watch out for hidden royalty deductions. Keep a look out for unstated royalty deductions even if your royalty rate seems reasonable. Beware of deductions for the record label's general operating expenses as well as of breakage, free goods, and reserves deductions.
- Keep track of your royalty payments. You need to make sure your label provides full transparency over how many albums or tracks are sold or streamed. The communication between an artist and the label should be open and clear so that the artists know exactly how their music is performing and what income they can expect.
In the digital age, artists have many opportunities to market and distribute their music independently using social media and other platforms. Still, because there are so many things involved in an artist’s success, it can become quite overwhelming to deal with everything yourself, as an independent artist.
A deal with a label frees the artist from managing everything and gives more opportunities to focus on the creative process. The nature of recording agreements is changing along with the digital era. Major and indie labels have changed the terms of their contracts as a result of the quick rise in digital streaming.
Still, before signing any contract with a label, you as an artist should always keep in mind your career goals. You need to also read everything carefully and fully understand the terms and conditions of further work with the label. Be sure to take care of yourself and your music by having a well-compiled contract with all information regarding the copyrights, royalties, etc.